The explosion in clean tech investing has been a boon to material scientists and engineers from the semiconductor industry. Sources at Intel tell me that many of them have seen co-workers depart for solar start-ups or companies working on new types of batteries.
But software experts shouldn't feel left out, notes Warren Weiss, a general partner at venture capital firm Foundation Partners in a stopover at the firm's offices last week (They are right next to Sunset Magazine in Menlo Park, Calif.). In clean tech, one of the bigger opportunities, he says, is with companies that want to better manage the electrical grid, i.e. the people creating technology for curbing power automatically during peak times or detecting outages.
The products from these companies will look familiar to anyone who's spent a lot of time at Oracle, IBM or even Cisco. Energy efficiency companies sell middleware and network management technology. In other words, it's a lot of software. The CEO at SilverSpring Networks, which manages networks for water and gas utilities, comes from Perot Systems.
"This is an industry that hasn't had a lot of innovation since World War II," he said.
Foundation spends most of its time in clean tech on energy efficiency. Besides investing in Silver Spring, it also had a piece of EnerNoc, which went public earlier this year (as did competitor Comverge). These two IPOs have been some of the most notable clean exits this year.
Weiss is now looking at a company with software for taking "corrective action" when potential problems occur at nuclear power plants. It was founded by a person who's already founded a few successful software companies.
Maybe they'll call it China Syndrome Software.
--Don't expect to see Foundation invest in a lot of biofuel companies. These companies require huge amounts of capital--think $50 million or more--to build facilities, which can be risky. The recent credit crunch has begun to change how these companies are valued.
--The same goes for solar and clean coal. These companies need lots of capital and the technology needs to be improved. "All of these technologies are 10 years away from being cost competitive," he said. "Energy efficiency is something you can do today."
--That said, the firm has placed some bets on companies specializing in green building materials, which also need huge amounts of capital to build factories. It invested in Serious Materials, which has a more eco-friendly drywall, and a green cement company in stealth mode. Consistency isn't everything.
--Water is a big problem. "The world's greatest crisis is probably water, not carbon," he said. Unfortunately, most of the customers for water technology are municipalities, and they move slowly. Foundation has looked at close to 50 water deals and not invested. The closest water company it has is Novazone, which makes an ozone purification system for bottled water and food.